When it comes to purchasing real estate, what is in the deed to convey title can put the buyer at different levels of risk depending on what type of deed it is and what it guarantees. Where the transfer of title during the purchase and sale of real estate changes who owns it, it is the recorded documents, and in particular the deed, that give legality to the title.
The deed is the document that physically transfers title from one person to another. When both parties sign the deed, have it notarized and recorded at the office of the Recorder of Deeds in the county from which the property is located, the transfer of ownership rights becomes legal.
A simple deed will include the names of the buyer and seller, their signatures, and a property description. But some deeds will also include other guarantees and promises that provide more security to the buyer. For Delaware residents who are preparing to enter the Sussex County real estate market, it is vitally important to protect your interests and your rights.
The most common kinds of real estate deeds
Most real estate title deeds fall into four different categories and offer different amounts of security to title:
- A general warranty deed gives the buyer the most protection by guaranteeing that the seller holds title to the property, and that it is free of encumbrances or liens that may cloud the title.
- A special warranty deed holds higher risk than a general warranty, but still guarantees that the owner has legal rights to the property, and there were no encumbrances while the seller held title to it. It offers no guarantees from any period prior to this transaction. It is most often used when commercial property is sold.
- A bargain and sale deed simply states that the owner holds title to the property but offers no protection from encumbrances. With this type of deed, title defects may surface years later, which will spell trouble for the buyer. This kind of deed is often found as part of tax sales or foreclosure actions.
- A quitclaim deed only states the interest that the owner may have in the property at the time of transfer, but does not guarantee this. Nor are their guarantees that if does not have title defects. It is most often used in transfer between spouses, who will likely know the property’s history.
In Delaware, the first person to record a deed in the county where the property is located will take precedence over any unrecorded deed. Likewise, if two people receive a deed to the same property, the first person to record it will hold title.